Groupe Arche

The main activity of Groupe Arche was casting, machining and assembling aluminium parts for the automotive industry, mainly for engines (carters, oilpans, etc.). The group possessed three high pressure aluminium foundries, two in France and one in Spain, and in 2017 employed more than 900 people, including temporary staff. Its main customers were Renault, with whom the group had an interdependent relationship, and Daimler.

At the time that the company first came to Zalis for help the group had severe cash flow problems, the holding company and one of the group companies were in administration and two other group companies were under the protection of the court in a voluntary procedure called “sauvegarde”, which in some but not all aspects is similar to Chapter 11 in the USA.

In November 2016 following the abrupt departure of the entire senior group management team following the sale of a factory, Zalis was asked to conduct a flash analysis of the situation in order to establish a snapshot of the issues facing SAM (the group’s flagship factory that accounted for more than half of group turnover) and to make recommendations to improve the management and the financial results of the business.

At the time the aluminium foundry market in Europe had insufficient capacity and the combination of exceptionally high volumes and the legacy of historical under‐investment, together with the departure of the senior management team, meant that there many serious operational issues. There had been a significant deterioration in the levels of quality, productivity and customer service.

Following the initial report, in December 2016 Zalis was engaged for an operational assignment in order to provide experienced interim management for the group and to start the implementation of our recommendations, while the administrator launched a sale process for the group’s principal sites.

Zalis provided a full time CRO at SAM, the largest company in the group, as well as a finance director, a supply chain manager and a maintenance manager. Zalis also provided the chairman of FVM, the other French factory, and directors for the group holding company and two of the operating companies, to help guide the group towards the optimal outcome for all its stakeholders.

For various reasons the sale process lasted far longer than is normal in these circumstances, but Zalis provided operational support and strategic advice throughout the process. The sale process was in fact seriously disrupted, first by the strategy of the majority shareholder, which was to put itself in a position to make an uncontested offer for some of the group companies without making any further investment, and then by union disputes and strikes as the employees became more and more frustrated and concerned about their future.

Eventually, in December 2017 the three factories were sold in an asset deal to a Chinese industrial investor. More than 90% of the jobs at the factories were saved and the acquirer made firm commitments to make substantial long term investment in the three plants in order to bring them up to the levels of quality and efficiency that its customers required.